Looking like another 4% or more productivity growth quarter, and perhaps a labor
market improving by the equinox.

How is it that both employment and unemployment fell?:

Jobs Are Up! I Mean Down! Whatever … , by Paul Krugman: A confusing
employment report this morning: employment down, but unemployment also down. Nor
is this a story about workers dropping out of the labor force; the report shows
an increase in the employment-population ratio, the percentage of adults who are
working. What?

OK, the trick is that there are two different surveys. Payroll numbers come from
a survey of firms; unemployment (and employment-population) numbers come from a
survey of households. Both surveys are subject to error, both strict statistical
sampling error and things like incomplete coverage, uncertain seasonal
adjustments, and so on. When employment growth is near zero, on either side,
it’s not that surprising that the surveys should point in opposite directions.

The bottom line is that economic numbers are no more than rough indicators. You
have been warned.

Ton Bozzo digs deeper into the numbers:

Back to
Zero, by Tom Bozzo: The
unexpected drop in
the unemployment rate for January made me more than usually curious
about the household
survey results, and things there actually look OK for a change. The flat
unemployment rate between November and December '09 was the
less-than-virtuous result of declining labor force participation pacing the
decline in employment. This month's decline in the unemployment rate
reflects increasing labor-force participation and employment-to-population
ratios; unemployment levels and underemployment rates [1] are also down. The
unemployment decline appears to be statistically significant based on the
BLS's (inexact) guidance on sampling variability in household survey
estimates.

The headline employment figure, in contrast, is not a statistically (or
qualitatively) significant result, hence the summary's "essentially
unchanged" language. The everlovin'
net birth-death model is
subtracting more jobs this month than it did in
January '09 — -427,000
jobs vs. -356,000 a year ago — so if we're actually at a turning point
expect this adjustment to be a drag on measured employment. The mild upturn
in manufacturing employment follows other
strong data from that sector, and it's also not unexpected to see
temporary employment accounting for the measured service sector growth.

Brad DeLong has been scratching his head over
seasonal adjustment to the unemployment claims series; I'm wondering
about what's showing up as a December employment dip. The
not-seasonally-adjusted data usually features a small November-to-December
drop. Last year's -538,000 was less than in '08 (around -1 million) but more
than previous years. A December dip after a strong November doesn't feel
right, so go figure.

Looking like another 4% or more productivity growth quarter, and perhaps a labor
market improving by the equinox.

How is it that both employment and unemployment fell?:

Jobs Are Up! I Mean Down! Whatever … , by Paul Krugman: A confusing
employment report this morning: employment down, but unemployment also down. Nor
is this a story about workers dropping out of the labor force; the report shows
an increase in the employment-population ratio, the percentage of adults who are
working. What?

OK, the trick is that there are two different surveys. Payroll numbers come from
a survey of firms; unemployment (and employment-population) numbers come from a
survey of households. Both surveys are subject to error, both strict statistical
sampling error and things like incomplete coverage, uncertain seasonal
adjustments, and so on. When employment growth is near zero, on either side,
it’s not that surprising that the surveys should point in opposite directions.

The bottom line is that economic numbers are no more than rough indicators. You
have been warned.

Ton Bozzo digs deeper into the numbers:

Back to
Zero, by Tom Bozzo: The
unexpected drop in
the unemployment rate for January made me more than usually curious
about the household
survey results, and things there actually look OK for a change. The flat
unemployment rate between November and December '09 was the
less-than-virtuous result of declining labor force participation pacing the
decline in employment. This month's decline in the unemployment rate
reflects increasing labor-force participation and employment-to-population
ratios; unemployment levels and underemployment rates [1] are also down. The
unemployment decline appears to be statistically significant based on the
BLS's (inexact) guidance on sampling variability in household survey
estimates.

The headline employment figure, in contrast, is not a statistically (or
qualitatively) significant result, hence the summary's "essentially
unchanged" language. The everlovin'
net birth-death model is
subtracting more jobs this month than it did in
January '09 — -427,000
jobs vs. -356,000 a year ago — so if we're actually at a turning point
expect this adjustment to be a drag on measured employment. The mild upturn
in manufacturing employment follows other
strong data from that sector, and it's also not unexpected to see
temporary employment accounting for the measured service sector growth.

Brad DeLong has been scratching his head over
seasonal adjustment to the unemployment claims series; I'm wondering
about what's showing up as a December employment dip. The
not-seasonally-adjusted data usually features a small November-to-December
drop. Last year's -538,000 was less than in '08 (around -1 million) but more
than previous years. A December dip after a strong November doesn't feel
right, so go figure.